SMM Evening Comments (Jun 30): Shanghai base metals rose across the board as China factory data boosted recovery hopes

SHANGHAI, Jun 30 (SMM) – SHFE nonferrous metals ended higher across the board on Tuesday, following after they opened higher today, as positive manufacturing data from China bolstered investors optimism about the recovery in demand. 

Zinc led the increases with a rise of 1.14%. Copper advanced 0.91% on the day to the highest level in more than five months. Aluminium closed up 0.77%, lead climbed 0.89%, tin added 1% and nickel gained 0.97%. 

The ferrous complex fell for the most part as demand weakened amid rainy weather while supply lingered at highs. Iron ore shed 0.47%, rebar edged down 0.11%, stainless steel eased 0.15%, coke slipped 1.26%, while hot-rolled coil climbed 0.25%. 

China’s manufacturing purchasing manager’s index (PMI) came in at 50.9 in June, beating expectations and up from 50.6 in May, the National Bureau of Statistics said on Tuesday.

While domestic demand and supply are starting to pick up with major economies reopening, uncertainties remain as the coronavirus pandemic has not been effectively controlled overseas, the bureau cautioned.

Copper: The most-traded SHFE contract traded robustly as longs loaded up their positions amid optimistic prospects for demand. It rose to a session high of 48,800 yuan/mt and closed 0.91% higher on the day at 48,790 yuan/mt, with open interest up 3,993 lots to 124,000 lots. Prices have returned back to pre-coronavirus levels seen in January. As the KDJ indicators continued to expand upward, technical support will likely see the contract testing pressure from 49,000 yuan/mt tonight. 

Aluminium: The most-liquid SHFE August contract extended a rally from Monday as it moved higher in the afternoon trading hours and closed the day 0.77% higher at 13,830 yuan/mt. 

Zinc: The most-active SHFE August contract trimmed some gains from overnight, ending 1.14% higher on the day at 16,835 yuan/mt. It is expected to move sideways around the five-day moving average tonight with little downsides. Trades in the spot market remained weak amid sufficient supplies. 

Nickel: The most-traded SHFE August contract traded with support from the 20-day moving average, finishing the day 990 yuan/mt higher at 102,780 yuan/mt, following a session low of 102,580 yuan/mt. Open interest continued to shrink, by 7,986 lots, with open interest in the SHFE October contract rising 5,033 lots to 51,105 lots on Tuesday. 

Lead: The most-active SHFE August contract bounced back after dipped to an intraday low of 14,640 yuan/mt before noon, as bullish positions gained the upper hand in the afternoon. It closed 130 yuan/mt higher on the day at 14770 yuan/mt, with the K-indicator trending upward. Technical support may extend the increase in Shanghai lead tonight. 

Tin: The most-liquid SHFE August contract climbed steadily and regained losses from Monday, rising to a session high of 138,990 yuan/mt to close at 138,830 yuan/mt, up 1,410 yuan/mt on the day. Pressure above is seen from 139,500 yuan/mt.